Risk Management & Macroeconomics
How Much Risk Does Diversification Remove? 48 US Industries, 1969–2026
From 1969 to 2026 the average US industry had 23.2% annual volatility. Ten industries chosen at random cut it to 17.8% and all 48 to 17.2%, but diversification did not protect against the market’s own fall: weighted by value, the 48 industries lost within 1.3 points of the market in six falls of more than 20%.
